The original 5,000 or so orders for the 737 MAX is dwindling by the month. The latest 737 MAX actual and intended cancellations appear to have grown steadily during the past weeks.
Updated July 10, 2020
The coronavirus crisis, the unknowns of exactly when the MAX will fly again, as well as questions about the future passenger confidence in the airplane, has caused airline operators to rethink their MAX-orders.
On June 10th American Airlines decided it not take delivery of 17 of its MAX-ordered aircraft unless the airline can obtain financing for its order.
American currently has 24 737 MAX aircraft in its fleet, temporarily parked like the rest of the world’s MAX jets.
Another 76 MAX airplanes had been ordered for future delivery. Out of the 76 undelivered jets, 17 of them are now in need of financing before the airline can take delivery.
The financing-solutions for the 17 jets could come from:
- Boeing Capital-arranged financing (the financing division of Boeing), as a loan to American.
- Boeing Capital could buy the 17 planes and then lease them to American.
- A third-party airplane leasing company could finance the planes and then lease them to American. Such a solution could involve China buying a chunk of and partially take control of the American Airlines fleet, a move the Chinese recently did by taking control of some United airplanes.
The airline intends to take delivery of the remaining 59 MAX orders in the future, anticipating an end to the coronavirus pandemic and its financial devastation on the airlines.
Avolon (aircraft lessor)
Dublin-based airplane lessor Avolon announced the cancellation of additional 27 Boeing 737 MAX planes on July 7. This is the second of Avolon’s MAX-order cancelations. Avolon got rid of 75 MAX jet orders in April.
However, Avalon still has 37 MAX jets on order with Boeing.
Avalon has also canceled one Airbus A330NEO widebody jet order. That’s the fifth Airbus order cancel since the coronavirus pandemic started. Furthermore, Avalon has deferred the delivery of three A320NEO airplanes until 2022.
With its recent 737 MAX, A330NEO, and A320NEO airplane order cancellations the aircraft leasing company has reduced its near-term purchasing commitments by over 140 aircraft in 2020.
Avalon leases its aircraft to several airlines, including Norwegian Air.
Boeing’s reaction to the Avalon 737 MAX cancellation
Boeing stated that the company had come to an agreement with Avolon. The aircraft maker wants to further restructure its order book in an effort to help airlines and leasing companies “balance supply and demand with market realities” during the coronavirus pandemic.
A Boeing spokesman said,
“We appreciate Avolon’s ongoing commitment to the 737 family through their outstanding orders.”
BOC Aviation (aircraft lessor)
BOC Aviation canceled its order for 30 of the MAX jets the last week of June.
Norwegian Air canceled orders for 92 of the MAX jets at the end of June as part of their carefully designed plan to go from survival to profit long-term.
The reasons for the 737 MAX cancellations
- The coronavirus pandemic has sharply decreased the demand for the airlines’ new fleet inventory needs. Of course, the virus pandemic has sent shockwaves through the world’s airlines, affecting aircraft orders of all types, from Boeing as well as Airbus.
- In spite of the MAX getting recertified to fly again, many operators are adopting a wait-and-see attitude to monitor passengers’ reception and willingness to trust that the plane is safe to fly once recertified. Boeing and the airlines have a tremendous marketing challenge ahead to rebuild the public’s trust in the airplane. The plane’s two deadly crashes may (or may not) have permanently tarnished the MAX-reputation among flyers. Only time will tell.
What is your opinion on the latest 737 max cancellations? Where do you think the 737 MAX aircraft orders are headed? Will the COVID-19 pandemic combined with uncertainties of rebuilding passengers’ trust in the airplane affect the future of the airplane? There are so many factors affecting the further success of the MAX. Let us know what you think! You can contact us here.
Featured Image: 737 Taxiway stop, awaiting further clearance. Capt. Steve, for CaptainJetson.com.